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November 21, 2013

ACCA supports IAASB proposals on auditor reporting

Article by James Callery

The Association of Chartered Certified Accountants (ACCA) has expressed support for the International Auditing and Assurance Standards Board (IAASB) proposals on auditor’s independent report.

In July this year the IAASB released for consultation an exposure draft (ED) called Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISA).

The proposed new ISA aims at producing more informative auditor’s reports, an alleged disadvantage of these reports perceived in the wake of the global financial crisis.

"The IAASB has let everyone see and comment on what it believes are the changes to auditing standards needed to improve the usefulness and relevance of reports by auditors.

"There are always going to be quibbles over wording, but broadly, ACCA is supportive of these proposals," ACCA head of auditing practice David York said.

According to York, the key change is the new requirement for auditors of listed companies to describe ‘key audit matters’, which are the critical items they already communicate privately to companies’ boards.

"Investors will now be able to see what took centre stage in the audit," York observed adding that the auditors’ reports will no longer be "a simple pass or fail assessment" but a document read and digested at length.

The ED, which gives the auditor’s opinion a higher importance, followed calls from stakeholders and users of audited financial statements pushing for revised international standards on auditing.

The European Commission and the US Public Company Accounting Oversight Board have similar proposals under discussion, ACCA noted in a statement.

"Best practice will emerge only by allowing scope for auditor judgement to tailor reports to individual client circumstances," York concluded.

The deadline to comment on the IAASB’s proposal is 22 November.

Related article

Critical moment: US audit reports to change after 75 years

Alex Malley on auditor reporting

Related links

The Association of Chartered Certified Accountants

The International Auditing and Assurance Standards Board

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